19NOVEMBER 2023CFO TECH OUTLOOKaccounting data. For our organization, there are a number of projects to support these goals as we deploy continuous process improvement as an internal key performance indicator. This includes implementing RPA (Robotic Process Automation) for regulatory call reporting and reconciliation, developing paperless workflows for account payables and outsourcing certain technologies to support accounting related processes. All these efforts and activities position accounting to leverage technology and reduce repetitive activities, eliminate errors, which will conform for increased accounting activities from regulatory changes and company growth.What are some of the challenges and risks associated with foreign exchange rate fluctuations and interest rate movements in your treasury operations?Kung: The heavily anticipated "Fed's next move" based on inflation related data continues to push the U.S. dollar's appreciation against most major currencies. Since CTBC Bank does not engage in trading of foreign currencies, the impact is minimal and should be similar to most community banks. FX risk still resides with those customers dealing with foreign currencies as a strong dollar may weaken overseas demand. Foreign Exchange Forward would be an effective hedging tool for those companies looking to minimize foreign exchange fluctuation and stabilize both balance sheet and income volatilities. Among the various causes of FX volatility, the yield curve inversion has caused profit compression in the financial industry. Unlike a decade ago, depositors have a wide array of choices from treasury bills to broker CDs, to online only financial institutions (Neo Banks) as well as the option to utilize non-financial institutions. With continued uncertainties, banks are careful to lend while focusing on retaining deposits.Any advice, suggestions or warnings you would give to professionals in your similar role working in other companies in treasury and accounting functions in terms of dos or don'ts?Kung: We all know that deposits are the key to stable growth, and more specifically, low-cost deposits. In today's high interest rate environment, low-cost deposits would mean demand deposits (checking accounts) and only those banks with a high percentage of demand deposits can minimize margin compression. Taking necessary time to invest in process improvement to effectively leverage existing resources will pay off. Just like manufacturing, low cost, but a highly effective cost to serve would "win" given the similarity of products and services. Careful planning of asset growth in anticipation of potential interest rate movement coupled with an appropriate hedging strategy would provide a prudent balance sheet--we call that balance sheet optimization. The proposed rule changes in reporting, ESG, Basel III endgame, and governance will force financial institutions to re-evaluate the overall credit, investment, and risk management approach. In the rapidly evolving banking sector, could you highlight one specific technological trend that has captured your attention recently?Kung: There are numerous technologically advanced platforms to support loan origination, servicing, and various automations. Bigger banks with elevated levels of resources can deploy the latest and greatest technology while traditional community banks should prepare themselves with the option to play in new tech. One of the most evolved technologies coupled with strategic positioning belongs to Neo banks ­ a direct bank that operates exclusively online. It is potentially a mid-term threat due to its technologically advanced capabilities to completely replace the functions of traditional branch networks. Neo banks target Generation Z. Then Generation Alpha may pose concerns even for mega banks as the latest generations fully adopt to ever changing technology as they're just now entering the AI era or digital transformation. These developments, together with cybersecurity, are changing the customer experience and causing financial institutions to rethink their mid-term to long-term strategies. Accounting processes have evolved significantly over recent decades. The core is to improve the process and create efficient and effective gathering by preparing and auditing of accounting data
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